Chapter 4 Poverty

4.1 Introduction

Since India gained independence, two of its most important national goals have been to provide a minimum standard of living for all citizens and to significantly reduce poverty. The development strategy, as outlined in successive Five-Year Plans, has consistently focused on Antyodaya, which means the upliftment and development of the poorest sections of society.

In his famous speech to the Constituent Assembly in 1947, Jawaharlal Nehru emphasized that independence was merely the first step towards greater achievements, chief among them being "the ending of poverty and ignorance and disease and inequality of opportunity."

Poverty is a global challenge, and India is central to this issue, as it is home to more than one-fifth of the world's poor. Globally, about 300 million people lack the means to meet their basic needs. Poverty is a multifaceted issue that changes over time and across different locations. It is not just about a lack of money; it is a state of deprivation that affects every aspect of human life. Therefore, to effectively combat poverty, it must be clearly defined, measured, and understood through various indicators, including income, consumption, social factors like education and health, and socio-political access.

4.2 Who Are The Poor?

In every society, there is a spectrum from the very poor to the very rich. The poor are visible in both rural and urban areas and are characterized by a life of deprivation and vulnerability. The story of Anu and Sudha in Box 4.1 starkly illustrates these two extremes of Indian society.

Common Characteristics of the Poor:

The poor, whether in cities or villages, share several defining characteristics:

• Few Assets: They possess minimal assets, such as land, and often live in kutcha houses made of mud, grass, or thatch.
• Hunger and Starvation: Many struggle to get even two full meals a day. Hunger and malnutrition are persistent problems.
• Lack of Skills and Opportunities: Due to a lack of basic literacy and skills, their economic opportunities are severely limited, leading to unstable or casual employment.
• Poor Health: They suffer from ill health and physical weakness. Serious illnesses or disabilities can push them deeper into poverty.
• Indebtedness: Lacking access to formal credit, they often borrow from moneylenders at exorbitant interest rates, trapping them in a cycle of chronic debt.
• Lack of Basic Amenities: Most poor households lack access to electricity, safe drinking water, and proper sanitation. They rely on firewood and cow dung cake for cooking fuel.
• Gender Inequality: Poor women face extreme inequality in employment, education, and decision-making. They receive less care during pregnancy, and their children have a lower chance of survival and healthy birth.

Identification by Occupation:

• Rural Poor: These are primarily landless agricultural laborers, cultivators with very small or unproductive landholdings, and tenant farmers.
• Urban Poor: The urban poor are largely composed of migrants from rural areas. They work as casual laborers in various jobs (e.g., construction workers), push-cart vendors, street cobblers, rag pickers, and other self-employed individuals in the informal sector.

Box 4.2: What Is Poverty?

Poverty is more than just an economic condition. As described by scholars, it is a multi-dimensional state of deprivation. It encompasses:

• Physical Deprivation: Hunger, sickness without access to medical care.
• Educational Deprivation: Inability to attend school or to read.
• Economic Deprivation: Not having a stable job, fear for the future.
- Emotional and Social Deprivation: Losing a child to preventable illness, powerlessness, and a lack of voice or freedom in one's community.

4.3 How Are Poor People Identified?

To design and implement effective poverty alleviation schemes, the government must first identify who is poor. This requires a scale or mechanism to measure poverty.

Historical Context: Dadabhai Naoroji's Method

In pre-independent India, Dadabhai Naoroji was the first to conceptualize a Poverty Line. He used the diet of a prisoner and calculated its cost at prevailing prices to create a 'jail cost of living'. He then adjusted this for a normal population, which includes children. He assumed one-third of the population were children, with half consuming very little and the other half consuming half of an adult's diet. This led to an average consumption level of three-fourths of the adult jail diet, which he used as the poverty line. His calculation was: $ (\frac{1}{6})(\text{Nil}) + (\frac{1}{6})(\text{Half}) + (\frac{2}{3})(\text{Full}) = (\frac{3}{4})(\text{Full}) $.

Post-Independence Efforts

After 1947, several official bodies were formed to create a mechanism for identifying the poor:

• Planning Commission Study Group (1962)
• Task Force on Projections of Minimum Needs and Effective Consumption Demand (1979)
• Expert Groups (1989 and 2005)

Categorising Poverty

The poor are not a homogenous group. They can be categorized based on the duration and severity of their poverty.

The Poverty Line

The poverty line is a cut-off point that divides the population into 'poor' and 'non-poor'. In India, it has traditionally been based on a minimum nutritional requirement.

• Calorie-Based Norm: The Planning Commission defined the poverty line based on a minimum calorie intake: 2,400 calories per person per day in rural areas and 2,100 calories in urban areas.
• Monetary Value (MPCE): This calorie requirement is converted into a monetary value, the Monthly Per Capita Expenditure (MPCE). For 2011-12, the poverty line was defined as consumption worth ₹816 per person per month in rural areas and ₹1,000 in urban areas.

Criticisms of the Poverty Line Mechanism

This method of identifying the poor has faced significant criticism:

• It lumps all the poor into one category, failing to distinguish between the severely poor and those just below the line.
• It is based only on expenditure on food and a few other items, ignoring other vital dimensions of poverty.
• It does not account for crucial social factors like illiteracy, poor health, lack of access to resources, discrimination, or the absence of civil and political freedoms.
• Many economists question the data collection and methodology, alleging that the government manipulates figures to show a decline in poverty.

Due to these limitations, scholars like Nobel Laureate Amartya Sen have developed more comprehensive measures, such as the Sen Index, to capture the multiple dimensions of deprivation.

4.4 The Number Of Poor In India

The proportion of the population living below the poverty line is known as the Head Count Ratio. Official data on poverty in India is released by the NITI Aayog (formerly the Planning Commission), based on consumption data from the National Sample Survey Organisation (NSSO).

Trends in Poverty (1973-2012):

• Absolute Numbers: The number of poor people declined from over 320 million in 1973-74 to about 270 million in 2011-12.
• Proportion (Head Count Ratio): The percentage of the population below the poverty line fell from about 55% in 1973-74 to 22% in 2011-12.
• Rural-Urban Divide: Over three-fourths of India's poor continue to live in rural areas. While the absolute number of rural poor has declined, the number of urban poor increased slightly in the 1990s before declining.

State-Level Poverty:

Poverty levels vary significantly across states. In 1973-74, a large proportion of India's poor were concentrated in states like Tamil Nadu, Uttar Pradesh, Bihar, Madhya Pradesh, West Bengal, and Orissa. While many states have reduced poverty, four states—Odisha, Madhya Pradesh, Bihar, and Uttar Pradesh—still had poverty levels well above the national average in 2011-12. In contrast, states like West Bengal and Tamil Nadu have shown remarkable progress in poverty reduction.

4.5 What Causes Poverty?

Poverty in India is a complex problem with deep-rooted institutional, social, and economic causes.

Historical Causes:

• British Colonial Rule: British policies systematically destroyed India's economy. They led to de-industrialisation, imposed heavy taxes on peasants, and exported food grains, which resulted in devastating famines that killed millions. This colonial exploitation impoverished the nation and its people.

Institutional and Social Factors:

• Inequality and Social Exclusion: Widespread social, economic, and political inequality persists. The poor, especially members of Scheduled Castes and Scheduled Tribes, face discrimination and are excluded from opportunities due to lack of skills and knowledge.
• Lack of Education and Health: The poor are deprived of quality education and healthcare, which prevents them from acquiring skills and improving their income-earning potential.

Economic Factors:

• Unequal Distribution of Assets: Land is the primary asset in rural areas. Failed land redistribution policies meant that a large section of the rural poor remained landless or with small, unproductive landholdings.
• Unemployment and Underemployment: The industrial sector has not grown fast enough to absorb the surplus labor from agriculture. This leads to unemployment or casual, intermittent work with no job security.
• Indebtedness: Lack of access to formal credit forces the poor to borrow from informal sources at high interest rates, trapping them in a vicious cycle of debt. This is a major cause of distress, particularly among farmers.
• Inflation: A steep rise in the price of essential goods disproportionately hurts the poor, as a larger portion of their income is spent on food.

Box 4.3: Distress Among Cotton Farmers

The crisis among cotton farmers, particularly in states like Maharashtra and Andhra Pradesh, illustrates the severe impact of economic policies on the poor. Several factors have contributed to agrarian distress and farmer suicides:

• A shift to high-cost commercial crops without adequate technical support.
• Decline in public investment in agriculture.
• Dependence on private players for seeds and pesticides, which are often of poor quality.
• Crop failure due to pests or drought.
• Massive debt from private moneylenders at exploitative interest rates.
• Competition from cheap imports due to globalisation.

This situation highlights that for millions of small farmers, the issue is not just about profit but about survival itself.

4.6 Policies And Programmes Towards Poverty Alleviation

The Indian government has adopted a three-dimensional approach to poverty reduction, rooted in the constitutional objective of social justice.

1. Growth-Oriented Approach:

This approach, dominant in the 1950s and 60s, was based on the "trickle-down" theory. It assumed that the benefits of rapid economic growth (from industrial development and the Green Revolution) would eventually reach the poor. However, this strategy was not very successful. Economic growth was slow, population growth was high, and the benefits did not trickle down, leading to a widening gap between the rich and the poor.

2. Poverty Alleviation Programmes (Employment Generation):

Starting from the Third Five-Year Plan, the government launched specific programs to generate income and employment for the poor.

3. Providing Minimum Basic Amenities:

This approach aims to improve the living standards of the poor by providing essential goods and services either for free or at subsidized rates. Key programs under this approach include:

• Food and Nutrition: Public Distribution System (PDS), Integrated Child Development Services (ICDS), and the Midday Meal Scheme.
• Infrastructure and Housing: Pradhan Mantri Gram Sadak Yojana (for rural roads) and housing schemes like Valmiki Ambedkar Awas Yojana.
• Social Security: National Social Assistance Programme (NSAP) provides pensions to the elderly and destitute women.
• Financial Inclusion: Pradhan Mantri Jan-Dhan Yojana (PMJDY) encourages the poor to open bank accounts to receive direct benefit transfers and access insurance.

Box 4.4: Ramdas Korwa’s Road to Nowhere

This story from Surguja district is a powerful critique of top-down development planning. A road worth ₹17.44 lakh was built in the name of tribal development for a village that had only one tribal family, the Korwas. Meanwhile, Ramdas Korwa's simple request for a little water to make his land cultivable was completely ignored. The case illustrates how government programs can fail when they are designed to meet targets without consulting or involving the very people they are meant to help, leading to a massive waste of resources.

4.7 Poverty Alleviation Programmes — A Critical Assessment

Despite numerous programs, poverty and deprivation remain widespread in India. Scholars point to several critical concerns that hinder the successful implementation of these schemes:

• Benefits Grabbed by the Non-Poor: Due to the unequal distribution of land and other assets, and the influence of local elites, the benefits of many poverty alleviation programs are often captured by the non-poor.
• Insufficient Resources: The amount of resources allocated for these programs is often inadequate when compared to the vast scale of poverty in the country.
• Poor Implementation: The programs are heavily dependent on government and bank officials for implementation. These officials are often poorly motivated, inadequately trained, and prone to corruption, leading to inefficient use and wastage of resources.
• Lack of Local Participation: There is a significant lack of involvement from local-level institutions and the poor themselves in the planning and implementation process.

Ultimately, poverty can only be eradicated when the poor are actively involved in the growth process. This requires social mobilisation and empowerment of the poor, enabling them to participate and contribute. It is also crucial to build essential infrastructure like schools, roads, and power in poverty-stricken areas.

4.8 Conclusion

Over seven decades after independence, India's journey towards poverty alleviation has been one of mixed results. While the absolute number of poor has declined and there have been improvements in average income and living standards, the progress has been slow and uneven. Compared to many other developing countries, India's performance has not been impressive.

The benefits of economic development have not been distributed equally. While some sections of society and some regions of the country have prospered, a large part of the population remains trapped in a vicious cycle of poverty. The challenge remains to make growth more inclusive and to ensure that the poorest of the poor are not left behind.

Recap

This section provides a summary of the key takeaways from the chapter. It reiterates that poverty reduction is a primary goal of India's development. It defines the poverty line based on calorie norms and discusses the trends in poverty numbers and ratios. It outlines the major causes of poverty and explains the government's three-pronged strategy for poverty alleviation: growth-oriented development, specific alleviation programs, and provision of minimum needs. The recap concludes by noting the limitations of these government initiatives.

Exercises

This section contains questions for practice and self-assessment, designed to test the learner's understanding of the concepts discussed in the chapter, such as the adequacy of the calorie-based norm, the functioning of MNREGA, the relationship between unemployment and poverty, and the effectiveness of different poverty alleviation strategies.

Suggested Additional Activities

This section provides ideas for projects and discussions to deepen the understanding of the chapter's themes. These activities encourage learners to engage with the material more actively, for example, by collecting data on consumption patterns in their locality or analyzing household expenditure data to understand relative poverty.

References

This section lists the books, reports, and academic articles that were used as sources for the chapter and suggests further reading for those interested in exploring the different dimensions of poverty in India in greater detail.